Money always chases after higher return possible, and two directions are by no means unique to China. Take a look what happens to the oil market today, it is going up and up wile the demand is down and down, and you will understand the tremendous impact of hot money. What 郎 fails to recognize in his answer is that money invested in the manufactory is suppose to be long term (five years and longer) while investment (Real estate, commodity, stock, etc) is short term. Somehow he, and others, seems to believe that one should expect immediate return of any investment. That has never been the case in any industry other than investment. Any Economy, even free market, has its cycles of up and downs. While the impact of the cycle is inevitable and causing pains to all, it flash out the weak ones who just want to get quick returns or don’t know how to manage the downturn, and makes survivors stronger. Chinese manufacture need consolidation and this downturn should help. When you are big enough, bank will go after you and when there are not many small players willing to take 2% profit, the rest can ask for 5% or more.
Economy has never been about happy to all but a few survivors.
Also, we have more than our shares of popular economists, but way too few serious scholars. Maybe Lang should think to become one given he has what it takes. I gave up on “Li Stock” long time ago.